- The Washington Times - Sunday, February 17, 2002

House Republican investigators have begun at least one preliminary probe into the bankruptcy of telecommunications giant Global Crossing, whose jackpot investors include Democratic National Committee Chairman Terry McAuliffe.
Republican sources yesterday confirmed that at least one House panel the Energy and Commerce Committee is looking into the collapse of Global, which bears similarities to the Enron scandal but has attracted far less attention among the media and lawmakers.
"You're going to see that turn around," said one House Republican. "As members and investigators begin to peel back the layers of this onion, it probably stinks as much as this Enron issue."
Mr. McAuliffe, finance director for the Clinton/Gore campaign in 1996, turned a $100,000 investment in Global into $18 million in the late 1990s. Like Enron Corp., Global executives stand accused of shady accounting practices that inflated the company's assets and allowed some investors to reap huge profits before it became the fourth-largest bankruptcy in U.S. history last month.
The Associated Press reported yesterday that Global Chairman Gary Winnick controlled companies that had lucrative dealings with the fiber-optics network corporation before it went bankrupt. Those transactions involved Global paying millions of dollars to a privately held bank, Pacific Capital Group, and its subsidiaries controlled by Mr. Winnick.
Mr. McAuliffe worked for Pacific Capital. The relationships between the companies added an undisclosed amount to the personal profits of Mr. Winnick, who sold $734 million worth of stock before the company filed for bankruptcy, the AP reported.
Employees of Global lost their retirement savings when the company's stock price plummeted.
Congress has largely ignored the Global Crossing bankruptcy despite many similarities with the Enron scandal largely because the media have paid little attention to it, lawmakers of both parties say. One dozen House and Senate panels have been investigating Enron.
"Congress often responds to what is in the headlines," said Rep. Roy Blunt, Missouri Republican and chief deputy whip. "The Enron investigations, to some extent, are being driven by the media."
Mr. Blunt said he supports House committee investigations of Global to help lawmakers understand how to protect investors in the future.
"It makes all the sense in the world," Mr. Blunt said. "It would be very shortsighted for us to focus on only one thing. When there are several examples out there, you really do have a chance to craft legislation."
But in the Senate, Democratic leaders said they have no plans to look into Global's collapse.
"I don't know much about Global Crossing," said Sen. Harry Reid, Nevada Democrat and assistant majority leader.
Asked if that was because there was less media attention, Mr. Reid replied, "That's an understatement. Because if it had, I would know more about it."
Sen. Jon Corzine, New Jersey Democrat and a member of the Senate Banking Committee, said he doesn't "see the obvious connects" between Enron and Global Crossing.
"I don't think there is the blatant lockdown situation that occurred with regard to pensioners, and other seemingly apparent fraudulent criminal practices that show up in the Enron case," Mr. Corzine said.
He said Senate Democrats were not avoiding a probe of Global because of Mr. McAuliffe's profit-making.
Senate Republicans said it will likely be up to the Republican-led House to hold hearings into Global.
"It should be investigated," said Sen. James M. Inhofe, Oklahoma Republican. "It stinks on its face. In terms of people who made small fortunes, it really needs to be looked into. I can't imagine that we would be investigating Enron without investigating Global Crossing. The nature of the problem is very similar."


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